The Science Behind Luxury Housing

The Science and Sense behind Luxury Housing

Out of the complete residential market in Pune, luxury housing comprises only of 2-3 %. There are around 2000 units which includes planned and under construction projects in Pune that ranges exceeding Rs. 4 crore.

Pravin Mahurkar, Pune Head of Jones Lang LaSalle India said that the drivers for luxury housing in Pune are higher disposable incomes on the heels of a burgeoning IT/ITEs overall business prosperity, service sector, growing objectives and the trend of shifting from standalone buildings such as bungalows to luxurious apartments, as these give more security, advanced social life, between amenities and central facilities maintenance.

The Luxury houses in Pune are bought by the top notches of the leading corporate and top level executives from the IT and MNCs, NRI’s returning to Pune, businessmen and the investors from Mumbai.
 
According to Mahurkar, in Pune, luxury housing is still an evolving segment in terms of technical aspects and specifications when compared to the corresponding markets in cities like Bangalore, Mumbai and Delhi. Though, buyers have the benefit of larger sizes for the same price when compared to these for more high priced cities. Pune’s luxury residential housing section is presently not moving at optimal pace as buyers have a variety of choices. Quick success is seen only by the best Projects. In other words, Pune’s luxury residential real estate market is on the verge of a supply overhang situation.

The challenges that this segment faces in Pune is the oversupply, saturation of the most famous areas, and a widening infrastructure issue. Most luxury residential property locations in Pune have peaked out and prices have remained stagnant for the previous two years. That said, most buyers of luxury residential properties in Pune today are end users and therefore not taking an investor’s view.

Most of the luxury properties are at Shahkarnagar, Kalyani Nagar, Prabhat Road, Koregaon Park, Boat Cub Road, Model Colony, Bhosale Nagar, Aundh Baner Corridor, Erandawane, Salisbury Park, Magarpatta and Sopan Baug. The price range for luxury apartments in Pune fall between Rs. 12000-20000 per sq. ft. The standard size of the luxury flats is between 3000 sq. ft. to around 7000 sq. ft.

Influence of luxury Residential Properties:

Lately, a national report on the dynamics of luxury residential properties was published by Jones Lang Lasalle Mumbai (JLLM). As per the report, India’s largest cities- like Bangalore, Delhi- NCR and Mumbai and extremely luxurious residential properties have perceived ten-fold appreciation over their launch prices over the last ten years, suggesting over 100% annual earnings on investment. Many of these properties saw promising pre-sale activity and were quickly sold out completely. Actually, demand for luxurious residential properties in cities like Gurgaon has always outpaced supply, which has overtaken the developers to shift their focus on this segment with a high pace.

How Does Luxury Properties Work for Developers?

The involvement costs for luxury residential property are also abundant and the developer holds to get advantage from the surged horizons of his brand among highly prosperous, top notch clients. This also means that the developer can uniquely position himself on the basis of quality luxury schemes. This increases the prominence and the reliability attached to a reputation for superior construction is automatically attributed to all the projects by the developer. In other words, equivalent mid-income housing projects that he launches benefit and will invariably see higher sales than comparable projects by developers who have not ventured into luxury housing.

That said, there is considerable responsibility on the developer of luxury housing. They must compulsorily introduce features which compare with or surpass those in other luxury projects in the market. Buyers for such projects have very high expectations and want their homes to offer as well as reflect a high lifestyle status. Flaws in design, construction and amenities will not be tolerated on a greater amount. Therefore, a luxury project can have a considerably negative repercussion on the developer’s credibility and future success.

Luxury Housing as Investment

The ultra luxury housing segment is comparatively stagnation proof. The buyers in this category are the C Suite of the corporate world, business tycoons and successful entrepreneurs, their financial state is not restricted to or administered by the economic considerations that deprives the middle class of sleep in the night. A substantial percentage of purchasers for such projects are able to self finance their investments through their accumulated income.

Recession may take a toll on the reaction generated and time taken in the project selling out completely at the targeted price. Nonetheless, the significant impact that the luxury residential schemes face in times of economic uncertainty is significantly lower when compared to residential projects aimed at other categories.